MasterCard to Acquire Travelex’s Prepaid Card Program

Dec. 9 (Bloomberg) -- MasterCard Inc., the world’s second-biggest payments network, said it will acquire prepaid card-management assets from Travelex Holdings Ltd. for 290 million
pounds ($458 million) to expand in one of the fastest growing
segments of the charge-card market.

The cash deal with London-based Travelex would give
MasterCard operations that manage and deliver consumer and
corporate prepaid travel cards, MasterCard said today in a
statement. The transaction is expected tobe completed in the
first half of 2011, according to the statement.

Prepaid-card transactions are expected to reach more than
$840 billion by 2017, according to a Boston Consulting Group
study commissioned by MasterCard and released this year. Chief
Executive Officer Ajay Banga, 51, is targeting markets beyond
the U.S. to boost revenue growth and accelerate the worldwide
consumer shift to plastic from cash and checks.

“I see growth opportunities in a number of the emerging
markets, but I also see growth opportunities in developed Europe
with this product,” Banga said during a conference call after
the announcement.

MasterCard doesn’t plan to issue cards directly as a result
of the transaction, according to the statement. The deal
excludes Travelex’s retail outlets, which are located in travel
hubs and tourist areas, Banga said during the call.

As part of the agreement, Purchase, New York-based
MasterCard signed a long-term contract with Travelex to manage
prepaid cards sold online and through the foreign exchange
suppliers’ retail stores, according to the statement.

‘Building Blocks’

“We’re putting on the building blocks,” of being a leader
in the prepaid business, Banga said on the call.

MasterCard said that the deal would add to earnings in
2013, according to the statement.

The transaction isn’t likely to be a large, new source of
earnings for the company, said Sanjay Sakhrani, an analyst with
Keffe, Bruyette & Woods Inc. in New York, who has an
“outperform” on the stock and owns none.

“Prepaid is one of the faster growing segments in card
payment and part of the reason it’s growing so fast is that it’s
growing off a small base,” he said. “Prepaid is a small
portion of total card volumes in the U.S. and even globally.”

MasterCard rose 58 cents to $251.22 at 4:15 p.m. in New
York Stock Exchange composite trading. The shares have declined
1.9 percent this year.